Does Not Support Automated Mapping to Ledger Codes This problem is worse when processing paper invoices and handwritten text.ĭue to the unpredictable nature of these errors, businesses have to recheck everything manually and are forced to employ support staff in this approach too. As a result, typos and wrong numerical values are common. Older OCR approaches use only visual features like contours for text recognition. Otherwise, some teams may simply decide that it’s easier to process some invoices manually. The effort required for creating invoice templates should be comparable to that for simple data entry.As you try to increase the data variance of your invoices, the overall accuracy goes down. As the template count increases, the OCR model loses accuracy.Maintaining, searching, and naming hundreds of templates becomes a logistical nightmare. Because these templates are not very flexible with their positioning and parsing rules, a new template is needed for every unique invoice layout.Businesses that get hundreds of invoices from different vendors daily face scaling challenges: Given the enormous variance in invoice layouts out there, the template approach just doesn’t scale well beyond a point. Cannot Handle a Large Number of Invoice Layouts Unfortunately, this approach also suffers several challenges that can’t be solved but are merely ameliorated using custom post-processing software and frequent manual intervention. Some invoicing applications provide visual editors to create these templates easily. An invoice template is a set of positional information and parsing rules that enable the software to transform the unstructured text from an invoice into structured data if that invoice matches that template. Invoice templates solve this to an extent. Given these problems with manual processing, most businesses use semi-automated invoice capture that combines invoice digitization, optical character recognition (OCR), and invoice templates.īecause invoices vary so widely in layouts and positions, you need a configurable way to make the software associate the text in an invoice with suitable invoice fields. Template-based OCR labeling (Source: Label Studio project ) Does not scale: All these challenges make for an approach that just can’t scale beyond a few vendors.Ĭhallenges in Template-Based Invoice Capture.As a result, both unintentional mistakes and deliberate frauds can go undetected for a long time and cause problems later on during financial audits. Cannot detect mistakes and fraud quickly: Manually verifying and correlating information across multiple invoices is neither easy nor efficient for people.Invoicing practices are slow: Manually conducting critical invoicing practices - like matching with purchase orders, bookkeeping, and ledger reconciliation - takes an unacceptably long time.Manual processing means paper invoices or digital files have to be passed around physically or by email instead of everybody seeing the same invoice through an online portal. Complicates coordination: In some industries, multiple departments coordinate to verify and process invoices.Requires physical storage: Paper invoices require resources for physical storage and organization, reducing available space and requiring more manpower.Handling each type manually using ad hoc processes can lead to coordination problems and errors. Cannot handle many formats: Vendor invoices take many forms - as paper through direct mail or fax, email attachments, digital files like PDF or image files, special formats like XML or electronic data interchange (EDI), or forms on invoicing portals for vendors.Risk of souring relationships with vendors: The above challenges can cause additional problems like late payments or payment disputes with vendors and sour relationships with them.Error-prone: Manual invoice processing is prone to many kinds of errors - typos, mistaking date and currency formats of other countries, misunderstanding handwritten text, and more.Time-consuming: Faced with business challenges like demand fluctuations and agile competitors, manual data entry and verification just hamper your decision-making for your business.Computing cost per invoice with a manual pipeline.
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